Employer reminder: Dental care expenses have changed

This tax season, employers must remember to include details around dental care benefits that they offer their employees.

Employers must report on a T4 or T4A slip whether – on Dec. 31 of the taxation year to which the information return relates – a payee or any of their family members were eligible to access dental insurance, or dental coverage of any kind – including health spending and wellness accounts – due to their current or former employment.

“This reporting requirement is mandatory beginning with the 2023 tax year, and will continue to be required on an annual basis,” the Canada Revenue Agency (CRA) said late last year. 

“Failing to report this information may result in financial penalties.”

To help employers comply, the CRA made the following changes to the forms:

• Box 45, Employer-offered Dental Benefits, was added to the T4. This new box will be mandatory for all slips.
• Box 015, Payer-offered Dental Benefits, was added to the T4A. This new box will be mandatory if an amount is reported in Box 016, Pension or Superannuation. The box will otherwise be optional.

The CRA may reject any T4 or T4A slip that is filed without this information, it said.

The large majority (93 per cent) of Canadians support (61 per cent) or are open to (32 per cent) the idea of the government providing a tax credit for smaller and medium businesses that offer benefits for employees to help cover the costs of dental care, among others, according to a previous report.

Canadian Dental Care Plan

The new tax filing requirement comes after, in December 2023, the federal government revealed details for the upcoming roll-out of the Canadian Dental Care Plan (CDCP). 

Once fully implemented, the CDCP will help ease financial barriers to accessing oral health care for up to nine million uninsured Canadian residents with an annual family income of less than $90,000.

The CDCP is being rolled out in a phased approach, with applications opening to seniors aged 87 and above in the last month of 2023.

Legislation for the Canada Dental Benefit received Royal Assent in November 2022, and the CRA started accepting applications for the benefit the following month.

Bill C-31, the Cost of Living Relief Act, No. 2 (Targeted Support for Households), provides eligible parents or guardians with up to $650 tax-free per year for two years to cover dental expenses for children under 12.

In September this year, the federal government picked Sun Life to help with the rollout of the Canadian Dental Care Plan.